Like this:

Worthy of note, but still mostly puzzling: continuing, low-level, organized opposition to smart electric meters. I can understand concerns over data privacy, but that is about it. Sure, in some states the roll-out came with a sense that the regulated utility was gaining more control over consumer electrical consumption and making customers pay for the privilege, but that is pretty much the nature of the state regulated electric utility business and not new with advanced metering.

“Under my administration, domestic oil and natural gas production is up, while imports of foreign oil are down,” Obama added in his statement. “In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security … even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas.”

Notice that Obama doesn’t directly claim credit – he just observes the correlation without asserting causation. (I imagine the phrase “we will continue to look for new ways to partner with the oil and gas industry” generated a few eye rolls among energy producers.)

It takes four to six years, Rapier says, for policies or higher oil prices to bear fruit. So Carter saw a boost in domestic oil production largely due to the Nixon’s push for an Alaskan oil pipeline and the sustained oil price increases that began in 1973. Similarly, he said, current increases in production are largely due to higher prices over the last several years which led companies to green light projects that were sub-marginal at lower prices. (I’d only add to the story a brief nod to technological improvements that are bringing down the cost of drilling and enhancing recovery.)

The “Masters Hypothesis” refers to claims by investment manager Michael Masters (in testimony before a Senate committee -included in this collection- and on the TV program 60 minutes, among other places) that significant flows of cash into commodity index funds drove the commodity price spike of 2007-08. Masters made a big splash with his claims, at least among the easily impressed (i.e. the TV program 60 minutes).

In brief, Irwin and Sander test the idea against market data and find no support for Masters’ claims. See a related discussion at the Big Picture Agriculture blog.

Here is the article abstract:

The ‘Masters Hypothesis’ is the claim that long-only index investment was a major driver of the 2007–2008 spike in commodity futures prices and energy futures prices in particular. Index position data compiled by the CFTC are carefully compared. In the energy markets, index position estimates based on agricultural markets are shown to contain considerable error relative to the CFTC’s Index Investment Data (IID). Fama–MacBeth tests using the CFTC’s quarterly IID find very little evidence that index positions influence returns or volatility in 19 commodity futures markets. Granger causality and long-horizon regression tests also show no causal links between daily returns or volatility in the crude oil and natural gas futures markets and the positions for two large energy exchange-traded index funds. Overall, the empirical results of this study offer no support for the Masters Hypothesis.

Yesterday the Energy Information Administration released the results of its analysis of possible price effects from increased natural gas exports, and the Wall Street Journal finds the drama (“Gas Prices Could Rise With Exports”):

Increased exports of U.S. natural gas could drive up domestic gas prices as much as 54% in 2018, federal officials said Thursday, in a projection that could complicate efforts by more than a half-dozen companies hoping to spend billions of dollars on new export terminals.

Sounds like a disaster for U.S. natural gas consumers, and that is the impression that some U.S. manufacturing companies would like you to form about possible natural gas exports.

If you read through the article, you pick up the slimmest bits of context: the 54 percent number is from just one of several scenarios studied, that scenario one assuming the lowest level of increased gas production and the fastest imaginable increase in exports; and current gas prices are below $3 per million BTU, the lowest in a decade. Also, the 54 percent is the peak price effect in the scenario, for 2018, but prices retreat after 2018 as the higher price sparks additional production.

EIA expects prices to recover over the next few years, even without exports, to just under $5 by 2018 in mid-line cases and to $6 for low gas production scenarios. Worst case prices (from consumers’ viewpoint) could average around $9 in 2018, then prices fall back toward $6. More likely scenarios have much more moderate price effects.

The EIA makes another interesting point in the report introduction. For all practical purposes, the export licensing requirement is only a big issue for trade with countries for which we are not in a free trade agreement. Under our free trade agreements, any proposed export is already deemed to be in the public interest and so satisfies the export licensing review standard.

So, let’s imagine the most successful anti-natural gas export political scenario: LNG export licenses get denied, Canada stops exporting gas to the U.S. because of low U.S. prices (already happening) and then starts importing gas from the U.S. Canadian companies build LNG export facilities on the Pacific and Atlantic coasts, buy low cost U.S. gas and exports high priced LNG to Asian and European markets. We already are net natural gas exporters to Mexico, and Mexican companies could provide the same kind of import/export service.

Else domestic industrial natural gas consumers – the primary interest group raising objections to potential LNG exports – will have to take on amendments to our current free trade agreements. I’d judge that unlikely, at least for now.

I found some things striking in yesterday’s SOPA/PIPA protests. One was Jim Harper’s clear and cogent statement that the Internet is not a thing, it’s a set of protocols stipulating how computers communicate with each other. That set of protocols is a platform, and those protocols are not the government’s to regulate.

Jim’s Cato colleague, the ever-reliable Julian Sanchez, points out that if you estimate the profits/surplus at stake from piracy relative to the lost value all of the other Internet activities that would be stifled under SOPA/PIPA, the cost of piracy is just not that large. Sure, it’s concentrated in the hands of politically-powerful entertainment content companies, but relative to the rest of the vibrant, dynamic value creation that would “be disappeared” it’s small. Moreover, domestic and international legal institutions already exist to deal with piracy; like any other human institution they are imperfect, but as a consequence of them the losses from piracy are small relative to what would be lost if Congress imposed SOPA/PIPA. Here’s a good, short video from Julian covering some of the basics:

But the notion that enforcement and prevention matters will be put in place that create massive harm to the lives of innocent individuals while being unlikely to really actually led to less of the activity targeted is not unprecedented. You can think about this every time you go through a US airport and think about who is winning there. …

So the scenario that US people should be concerned about is if publishing on the Internet becomes like airport security. That is, if copyright enforcers are able to automate enforcement without due process. That will raise the costs of publishing and will deter many. As is often the case with over-reaching laws, the problem is that it creates too few incentives for enforcers to enforce discriminately rather than indiscriminately.

These contributions to the discussion have all been outstanding, but the most useful one in my estimation is this TED video posted yesterday from Clay Shirky on the issues at stake in the SOPA/PIPA debate:

It really is a must-watch video, well worth 10 minutes of your time. Shirky describes the technological issues clearly for non-techies and delves helpfully into the legal history of copyright in media, but then makes the crucial economic point when he says “Time Warner wants us all back on the couch and not creating our own content”. In all of the justifiable furor about censorship, this is the economic point that gets a bit lost. For the past 70 years the entertainment companies have had a lot of market power, because entertainment was essentially an oligopoly. They profited handsomely from their market power over content. But with the decentralization and edge content generation now possible due to technology, and with the way that their content provides an input into that edge creation, we now have many more substitutes for their content. They are using the piracy red herring (which is not as large as they claim it is, as Julian points out above) to try to retain the viability of their decades-old business model and market power over content. That’s the real economic issue here — they want us back on the couch and in the movie theater.

This is a fight that is not new with SOPA/PIPA and the Internet, nor will it end with the Congressional retreat from these ill-designed pieces of proposed legislation. Yesterday raised a lot of awareness of the issues, but it’s going to have to happen over and over and over …

I’m going to give the last word to my friend Sarah, who makes a useful analysis of language and its use in the context of both SOPA/PIPA and the recently signed into law National Defense Authorization Act, complete with its provisions that allow extralegal detention of American citizens without due process on suspicion of terrorist activity. Sarah offers an analysis of Orwellian Newspeak language, and identifies disturbing parallels with our current environment:

It struck me today that the combination of SOPA/PIPA and the NDAA move us terrifyingly close to an Orwellian world where people, language, history, and information can disappear at any time. Forever. As if they never were. And worse than that, our primary way to discuss/protest/remedy that disappearance–the Web–will be taken from us as well. …

Newspeak as a language, then, mirrors the political system that creates it, and serves to support it and perpetuate it by creating an agreed upon reality where meanings are strictly limited, the possibility for unorthodox thought is all but eliminated, and an agreed upon “reality” allows Ingsoc to have been always in control. Winston’s friend Syme is correct that “Newspeak is Ingsoc and Ingsoc is Newspeak.”

I leave further connections to the contemporary political situation as an exercise for the reader.

Peter Behr, at ClimateWire, describes the U.S. Department of Energy’s efforts to rework its electric transmission study processes, created in the 2005 Energy Policy Act but stalled by adverse court decisions and political missteps. I’m not so sure that the new approaches will be any better received than the old, but I noticed in the article one salutatory effect from the broad regional transmission studies that the DOE has supported: state regulators are getting better access to competing viewpoints, which make them less dependent on the information provided by their incumbent regulated companies.

From the article:

[DOE’s Lauren Azar] said some interactions among state regulators, utilities, grid managers and interest groups were eye-opening.

“One state came into the process saying, literally, ‘We need absolutely no transmission,'” Azar said, declining to name the state.

“During this process, it became quite clear there was pretty significant congestion in that state. That state is now talking with its neighbors about how best to build transmission across state lines and into its state to bring renewable resources into its state. That did not happen before this process.”

Asked why that state’s regulators happened to be misinformed about congestion issue, Azar sounded her often-heard concern about the need for more competition in the power sector.

“One of the problems that I’ve seen in this industry is market power issues. Some folks that have less competitive generators actually don’t want to see more transmission, because what that does is bring a cheaper commodity into their area, and it threatens their use of their less efficient generators. I think that might be one of the reasons they didn’t get the information they needed.

“It was euphoric for me to be with the regulators and see the light bulbs go off when they realized some of the information they hadn’t been getting,” she said. “This process helped to give them that data.”